WSR 15-11-012

[Filed May 8, 2015, 11:06 a.m.]

Title or Subject: Medicaid State Plan Amendments (SPA) 15-0024 and 15-0027 Regarding Possible Changes to the Medicaid Nursing Facility Payment System (SPA 15-0024), Adult Family Home rates, Assisted Living rates, Independent Provider rates, and Agency Provider rates (SPA 15-0027).

Effective Date: July 1, 2015.

Description: The health care authority (HCA) in conjunction with the department of social and health services (DSHS) intends to submit two medicaid SPAs in anticipation of a final operating budget being passed by the state legislature. The purpose of this notice is to advise nursing facilities and the general public of potential adjustments to the methodology by which nursing facilities are paid for services they provide to medicaid recipients, as of July 1, 2015. These adjustments will be addressed in SPA 15-0024. Additionally, this notice is to advise adult family homes, assisted living facilities, independent providers, agency providers, and the general public of potential medicaid rate changes as of July 1, 2015. These changes will be addressed in SPA 15-0027.

This notice is furnished in accordance with federal medicaid law, at 42 U.S.C. Sec. 1396a (a)(13)(A) and 42 C.F.R. Sec. 447.205, and state regulations, at WAC 388-96-718. Under these provisions, DSHS must publish proposed new methodologies for determining the payment rates, and the justification for those new methodologies, when the changes would amount to "material" changes that require DSHS to amend its medicaid state plan under Title XIX of the federal Social Security Act.

SPA 15-0024 Nursing Facilities: The current session of the legislature is considering significant changes to the medicaid nursing facility rate methodology. These changes are reflected in the proposed operating budgets of both the house and senate; see Sec. 206 of each bill. The weighted average daily rate for state fiscal year (SFY) 2016 would be $178.87. The weighted average daily rate for SFY 2017 would be $191.87. DSHS is directed to ensure that the weighted average daily rate actually paid does not exceed those amounts; see RCW 74.46.421.

The changes are found in 2SSB 5152. It would replace the current methodology with a greatly simplified one. Instead of a system that focuses on the costs of each individual facility, the simplified system would look at industry-wide costs to establish prices to be paid. There would be four rate components: Direct care, indirect care, capital, and quality. Direct care would be a fixed rate at the industry median, adjusted for a facility's resident acuity. Indirect care would be a fixed rate at ninety percent of industry median costs. Capital would use a fair market rental system to set a price per bed. Up to five percent of the rate would be tied to quality indicators. The only remaining rate add-on would be reimbursement of the safety net assessment paid on medicaid resident days. There would be a three year phase-in period designed to mitigate negative impacts on facility rates and to contain spending within the relevant appropriations.

Facilities would be required to maintain certain minimum staffing levels, expressed in hours of care by providers (RNs, LPNs, and CNAs) per resident day.

The present rate methodology would stay in place during SFY 2016. During SFY 2016, DSHS would execute a rule-making procedure to write formal regulations implementing the new system for rates beginning July 1, 2016 (the start of SFY 2017). Facilities, their industry associations, employee groups, and residents would all be invited to participate in the rule-making procedure. The estimated increase in aggregated total annual expenditures for the above changes for SFY 16 beyond SFY 15 spending is anticipated to be $3,322,042. The estimated increase in aggregated total annual expenditures for the above changes in SFY 17 beyond SFY 16 spending is anticipated to be $24,906,052.

SPA 15-0024 will also contain the new "swing bed" rate. All information needed to calculate this rate is not available at the time of this notice.

For additional information:

The house budget can be found at http://app.leg.wa.gov/billinfo/summary.aspx?bill=1106&year=2015.

The senate budget can be found at http://app.leg.wa.gov/billinfo/summary.aspx?bill=5077&year=2015.

The proposed language of 2SSB 5152 can be found at https://www.dshs.wa.gov/altsa/management-services-division/office-rates-management under the heading "Legislative Proposals."

Persons or organizations that have comments on these changes may contact Edward Southon, Manager, Nursing Home Rates, Aging and Long-Term Support Administration, P.O. Box 45600, Olympia, WA 98504-5600, e-mail edward.southon@dshs.wa.gov.

Comments must be submitted by June 15, 2015.

SPA 15-0027 Adult Family Homes, Assisted Living Facilities, Independent Providers, and Agency Providers: The legislature is considering changes for SFY 2016, which can be found in the house and the senate proposed budgets. Not all changes being considered can be found in both proposed budgets. The following are proposals which the legislature is examining. At the present time it is unclear which proposal(s), if any, a future methodology may look like. These proposals are:

1. Beginning on July 1, 2015 (SFY 16), adult family homes would have their rate increased by five percent, as well as a rate increase of approximately thirty cents per medicaid client day for license fees. Additionally, on July 1, 2015, the adult family home license fee would increase from $225 per bed to $325 per bed. Beginning on July 1, 2016 (SFY 17), adult family homes would have their rate increased a further five percent. The estimated increase in aggregated total annual expenditures for the above changes beyond SFY 15 spending is anticipated to be $12,654,000 in SFY 16 and $26,897,000 in SFY 17.

2. Beginning on July 1, 2015 (SFY 16), adult family home expanded community services would receive a five percent increase. This is included in the total in number 1.

3. Beginning on July 1, 2015 (SFY 16), assisted living facilities would have their rate for AL, ARC, and EARC settings as well as dementia care increased by 2.5 percent. The estimated increase in aggregated total annual expenditures for the above changes beyond SFY 15 spending is anticipated to be $4,166,800 in SFY 16 and $4,166,800 in SFY 17.

4. Beginning on July 1, 2015 (SFY 16), SEIU 775NW individual provider rates would be as follows:

The estimated increase in aggregated total annual expenditures for the above changes beyond SFY 15 spending is anticipated to be $198,503,000 over the SFY 16-17 biennium.

5. Beginning on July 1, 2015 (SFY 16), agency providers would receive a thirteen cents increase to the administrative portion of the hourly vendor rate paid. This money would be to restore reimbursement that was previously cut. The estimated increase in aggregated total annual expenditures for the above changes beyond SFY 15 spending is anticipated to be $3,661,000 over the SFY 16-17 biennium.

6. Beginning on July 1, 2015 (SFY 16), additional funding would be provided to create parity of wages and benefits between agency providers and individual providers. The estimated increase in aggregated total annual expenditures for the above changes beyond SFY 15 spending is anticipated to be $61,573,000 over the SFY 16-17 biennium.

For additional information:

The house budget can be found at http://app.leg.wa.gov/billinfo/summary.aspx?bill=1106&year=2015.

The senate budget can be found at http://app.leg.wa.gov/billinfo/summary.aspx?bill=5077&year=2015.

Persons or organizations that have comments on these changes may contact Joseph LaChance, Manager, Aging and Long-Term Support Reimbursement, Aging and Long-Term Support Administration, P.O. Box 45600, Olympia, WA 98504-5600, e-mail joseph.lachance@dshs.wa.gov.

Comments must be submitted by June 15, 2015.

These SPAs are in the development process; therefore a copy is not yet available for review.